Looking Beyond the Books

The stereotypical "green eyeshades" accountant is a myth of history; today's CPAs are not bookkeepers or mere financial historians. If used properly, the CPA is truly a financial diagnostician and a valuable resource to any business.

Like doctors, engineers, and many other professionals, CPAs are licensed and regulated by the state in which they practice. In New Hampshire, among other requirements, CPAs must meet minimum education requirements in the accounting field, pass a two-day, national, written examination, and have at least two years of experience in public practice. In addition, to maintain licensure, CPAs must continually meet requirements for professional education (120 hours reported every three years), those who perform accounting and auditing services must undergo review by peer firms on a regular basis, and they must follow the rules governing professional conduct promulgated by the New Hampshire Board of Accountancy.

What Services Can a CPA Provide?

CPAs provide many traditional services that are familiar to business owners, including:

• Audits, reviews and compilations of financial statements
• Tax planning and tax return preparation
• Consulting in the design and installation of accounting and management information systems
• Review and evaluation of accounting systems and controls
• Preparation of financial statements and specialized reports
• Consulting to obtain debt or equity financing, negotiation with capital sources, and preparation of business plans

In addition to these traditional services, many CPAs now provide more specialized services, which include the following:

• Business valuations (in the context of transfers at death, lifetime gifting, divorce and employee stock plans)
• Business succession planning
• Investment planning, management and review
• Financial planning
• Forensic accounting
• Litigation support and provision of expert witness testimony
• Eldercare services
• International trade consulting

CPA Firm Trends

In addition to increased breadth of services provided to NH businesses, CPA firms are working more closely with and partnering with non-CPA professionals to provide those services. As recently as January 1999, the law required that CPAs own 100 percent of NH CPA firms. This law was first changed with the passage of a bill supported by the NH Society of CPAs and the American Institute of Certified Public Accountants (AICPA). This bill authorized non-CPAs to own up to one-third of CPA firms. The bill also attempted to facilitate the ability of CPAs licensed in one state to obtain licensing reciprocity from other states, thereby improving the ability of CPAs to practice in multiple states (CPAs must be licensed in each state in which they practice). In 2001, national CPA firms supported the introduction of a bill allowing non-CPAs to own up to 49% of Granite State CPA firms. This bill was passed and became effective as of August 20, 2001.

While it is too early to determine the effect of this bill on the ownership of NH CPA firms, this trend toward non-CPA ownership should allow CPA firms to become multi-dimensional professional service firms capable of addressing virtually all consulting and financial needs of their business clients. The change will allow firms to attract and retain highly skilled professionals in specialty areas because they can now offer these individuals the rewards of ownership in the firm. As a result, NH businesses that need these varied services may find that there is more opportunity to obtain all of these services directly from their CPA firm.

CPA firms have not been immune to the consolidation that has faced other business sectors. Due to the dominant role that CPAs have played in the market and their unique position as business advisor, CPA firms have been a target for merger and acquisition over the past several years. This has occurred with national, regional and local firms. New Hampshire businesses are served by large national and many regional firms that operate here, as well as hundreds of smaller local firms. While some larger firms provide "one-stop-shopping" to their clients, providing a full range of services, many smaller firms focus on one or two specialty service areas. Defining the needs of your business will help you locate the CPA firm that is best for you.

When Should You Hire a CPA?

The best time to hire a CPA is at the inception of your business, or early in your planning process. The role of the CPA is especially important at the inception of the business; providing guidance regarding choice of entity, where and how to hold assets, and obtaining capital. A CPA who is familiar with your company can be much more valuable and responsive when issues arise, if they have been consulted early in the process. Just as it is not advisable to hire a physician on the way to the emergency room, it is best not to hire a CPA after the contemplated transaction has been completed. A CPA who is consulted after a transaction or business decision has already occurred, is at best performing "damage control". While CPAs can be of assistance in these situations, the solutions available are likely to be limited.

How Should You Choose a CPA?

The decision about which CPA would best meet your needs is a personal one. To select the right firm or individual, you should ask the following questions:

• Is the individual a certified public accountant?
• Is the CPA firm or individual licensed to practice in the state(s) in which you operate? In NH, call the Board of Accountancy at 271-3286.
• Is the CPA a member of and active in the relevant professional organizations, including the New Hampshire Society of Certified Public Accountants and the American Institute of Certified Public Accountants (AICPA)?
• In what areas of practice does the CPA or firm have experience?
• Has the CPA received additional training or certification in these areas of specialty (financial planning, business valuations, taxation, etc.)?
• Is the CPA's personality and expertise compatible with your needs?

Of course, referrals from business associates, bankers and lawyers are often a good way to obtain names of experienced CPAs. You can also locate CPA firms in your geographical area of the state by accessing the New Hampshire Society of Certified Public Accountants' web site at http://www.nhscpa.org.